The Minister gave us to understand that he hopes enterprise liability will be introduced by the end of the year. He still has not settled the question of what will happen with regard to historic liabilities. He established a fund with the Medical Protection Society which will be reimbursed to the Exchequer if there are no claims by public patients by the end of a given year. No decision has been taken regarding the fund he established for private obstetricians, a generous move on his part as it avoided about 30 people being left without cover and the need for private hospitals, such as Mount Carmel and the Bon Secours, to stop undertaking obstetric work. Has the Minister not left the taxpayer in a very serious, open-ended position regarding historic liabilities, which, as he stated, can be considerable?

The current position is that neither protection society will have to take account of these historic liabilities once enterprise liability becomes effective because no agreement has been made between the Minister and either society. It, therefore, will be at their discretion to take up the historic liabilities. Given that they are funded from subscriptions from doctors, it is impossible that other doctors would be able to cover from their much smaller fees the very large obstetric claims which arise. I am at a loss to understand how the Minister proposes to cover these liabilities without resorting to Exchequer funds and why the Department of Finance has not been informed of this surprise.

I am very disappointed the Minister has not addressed a problem associated with obstetrics, namely, the recurrence of cerebral palsy. I am glad the Minister of State at the Department of Health and Children, Deputy Brian Lenihan, is here because the area of children is his responsibility. Difficulties are raised by the fact that a small number of people here can show that obstetric liability is the cause of cerebral palsy in their cases and thereby receive funds to try to improve the life of their children, whereas many families are unable to do so and are, therefore, not in a position to receive financial help. We should promote the idea that the State should provide sufficient assistance to these people. It does not have to be a massive amount, merely sufficient to meet their ongoing needs. While some people receive huge claims, such as in the case to which I referred earlier, others receive nothing.

As the Minister of State will not be in a position to address this important issue now, I ask that he places it at the top of his agenda. We know that those in lower socio-economic groups have lower birth rates and are much more likely to have children with cerebral palsy. This means that those most in need are frequently those who receive nothing.

It is also the case that were the child unfortunately to die, the compensation moneys would pass on by succession or inheritance to the next of kin, whereas it would be much more desirable in such an instance that there would be a central fund. As the Senator will be aware, the Government is addressing many of the issues related to insurance.

To explain how the issue of what are termed "historic liabilities" has arisen, I need to outline in greater detail how hospital consultants provide themselves with professional indemnity cover at present. Hospital consultants are obliged by their contracts to keep themselves indemnified against the cost of malpractice claims that may be made against them. They provide themselves with this cover through membership of one of the two mutual defence bodies that operate in Ireland. These are the Medical Defence Union and the Medical Protection Society. Both bodies are based in the United Kingdom.

The Medical Defence Union and the Medical Protection Society are not insurance companies and are, therefore, not subject to regulation under insurance legislation in either the United Kingdom or Ireland. Since April last year the Medical Defence Union has effectively become an insurance intermediary and offers its members in Ireland an insurance policy underwritten by the Zurich Insurance Company, trading here as Eagle Star. However, this policy does not cover obstetric risks. The bulk of the cost of the subscriptions paid by consultants employed in the public health service is reimbursed to them by their employers and borne, ultimately, by the Exchequer.

The particular form of cover offered by the defence bodies has left them vulnerable to sudden or unexpected increases in the cost of settling claims, especially in circumstances where claims arise from events in the past when subscription levels were much lower. In the absence of regulation by the insurance authorities the defence organisations had a particular obligation to ensure they were prudent in their reserving policies and that they charged their members subscriptions sufficient to meet those members' liabilities. When the clinical indemnity scheme is extended to cover consultants, the subscriptions the Medical Defence Union and the Medical Protection Society charge should fall as they will in future only be liable for those aspects of their members' practices not covered by the scheme and the non-indemnity benefits they also provide. The arrangement whereby consultants are reimbursed the bulk of the cost of their subscriptions will also cease when they come into the scheme.

These changes will obviously have an impact on the cash flow of the Medical Defence Union and the Medical Protection Society, but they will also mean these bodies will no longer be responsible for the greater part of the risks attached to their members' practices. If the defence bodies have conducted their affairs in a prudent and responsible fashion, there is no reason they should not be in a position to meet the liabilities for which they have accepted subscriptions in the past. Irish doctors have always paid the subscriptions requested of them and our public hospitals reimbursed to the consultants the amounts they were obliged to pay under the consultants' contracts. It is a matter for the managers of the defence bodies if they have not accurately costed their liabilities or failed to set the correct level of subscriptions to meet them. To suggest that the Exchequer and taxpayers should take on these liabilities makes no sense and cannot be justified on any reasonable ground.

Only one of the defence bodies, the Medical Defence Union, is suggesting that this is a problem, but its recently published annual report and accounts for 2001 do not highlight it. The notes to the accounts suggest that liabilities not backed by assets in the balance sheet are backed by reinsurance arrangements and access to capital. If this is the case, there is no reason to suggest that taxpayers should take on liabilities properly accounted for.